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+--- Thread: economic efficiency, property market? (/thread-103273.html)
economic efficiency, property market? - skyun - 02-23-2014 03:01 PM
what if the gouvernment cant meet the goal of econimic efficiency, then what and how property market being affected ?
- Graham H - 02-23-2014 03:05 PM
The property market is dependant on the demand and peoples ability to pay. If the government fails to meet the goal of economic efficiency then peoples income will remain low and so house sales will slow down and prices stagnate or drop.
- drbsen - 02-23-2014 03:06 PM
The question is not clearly understood. But still an attempt is made to answer here.
First, no government is capable of meeting the goal of economic efficiency. Only proper, transparent and competitive markets can help attain economic efficiency. If the markets are not transparent or are not competititive, govts. can introduce transparent regulation and play in the property market to enhance transparency and competition to improve efficiency. If the Govt. fails to do so, market will remain inefficient. However inefficient markets cannot sustain for long. New methods will develop and new players will enter the market sooner or later to impart competition in the market and efficiency will improve. In the case of property markets, too hogh prices will only result in weaker demand for property and slums will develop that would cause environmental and social problems. The consequential social costs will force markets to find new solutions to the problem of decent shelter and neighborhood for all people. When markets are imperfect and fail to deliver efficiency, govt. are to take steps to improve market functioning. If Govt. also fails to do so, social costs of imperfect markets will over a time become large and create social chaos. Then, Man's innivativeness and ingenuity will generate new solutions to correct for market imperfections and lead to gains in efficiency